IKEA

IKEA, founded in 1943 by Ingvar Kamprad, is the world's largest furniture retailer which specializes in stylish but inexpensive Scandinavian designed furniture. IKEA group had a total of 280 stores in 26 countries by 31st of August 2010, visited by 626 million people and worldwide sales of about 23.1 billion Euros in 2010 (http://www.ikea.com/ms/en_US/about_ikea/facts). IKEAs management philosophy and all its activities is founded on its mission of offering wide variety of functional furniture for the house, of a quality and at a price affordable by a majority of people. This mission is reflected by IKEAs competitive advantage, positioning strategy and marketing mix. The marketing mix is one of the major concepts in modern marketing. It is the set of controllable tactical marketing toolsproduct, price, place, and promotion (the 4Ps)that the firm blends to produce the response it wants in the target market. An effective marketing program blends all of the marketing mix elements into a coordinated program designed to achieve the companys marketing objectives by delivering value to consumer (Armstrong, G. and P. Kotler 2006).

Since IKEA is a multinational company and operating in various markets, the company is facing customers from different cultural backgrounds. Hence, to blend the 4Ps into a coordinated program in each of its world markets, IKEA tried to understand local traditions, cultural preferences, reactions and behaviors when designing marketing strategies and trying to appeal to the local customers. The company tried to look for the best possible compromise between largescale operations and adaptation to local markets.

Product is the central element in the market offering. IKEA, which has been importing the "streamlined and contemporary Scandinavian style" to the United States since 1985, found at least one opportunity to export an American style to Europe, as Europeans are picking up on some American furnishing concepts. In order to respond to this new demand, Ikea started to

market "American style" furnishings for the European market. Another example is China market. Anders Dahlvig, IKEAs CEO, points out in an interview that 5% of the products IKEA sells in China is for China only, in contrast to 1% in IKEAs European market (China-CBN 2005). In contrast with the traditional Chinese furniture, which is darker and sometimes with fancy carvings, IKEAs design introduces a lighter and much simpler style. Although most of the IKEA designs reflect the Swedish style, IKEA tried to fit its products to the Chinese market. IKEAs product policy in China conveys an important message: whether to standardize or adapt products for different markets is not a dichotomous choice, multinational companies should standardize their products as much as feasible and the products customize as much as needed.

Price is the other marketing mix used by IKEA. The company offers much more to the customers than just low prices. IKEA is positioned as selling at affordable price and offering reasonable quality. In order to cut down the costs, IKEA does not wrap its products fancily but with simple and environmental friendly material. Here we see again the societal marketing concept takes into effect. Concerning services, IKEA encourages its customers to do-it-yourself (DIY) but it also provides technical help if needed.

Place is another element used by IKEA in international marketing strategy. For example in China, IKEAs showrooms designed and arranged in accordance with a Chinese style. The store layouts reflect the layout of many Chinese apartments, and since many Chinese apartments have balconies, the stores even include a balcony section. Smedberg, who has worked for IKEA for nine years, says that Chinese tend to spend most on their living rooms, which he terms the heart of the home where many people "show off" and entertain. Many Chinese living rooms contain a dining table as well, so dining room purchases are also common. Because Chinese kitchens are generally small, customers spend less on them. At one time, bedroom furniture and decorations were the least popular purchases in China, perhaps because the room is the most

private and thus least visible place in the home. But IKEA has recently witnessed an enormous increase in bedroom sales--especially in Shanghai. Next year, the company plans to launch a global campaign that targets the complete bedroom.

The IKEA restaurants are important in providing its customers a place to eat and relax while shopping. The main restaurant serves meals based on its Swedish heritage, with traditional dishes. While emphasizing its Swedish origin, IKEA also takes into consideration the market it is having operations in. For example, IKEA Shanghai provides 3 kinds of meat cleavers and 3 kinds of chopsticks together with Western style of knives and forks. There are also bistro areas which sell localised snacks such as; hot dogs in the UK, baguettes in France, and pizza in Italy.

Promotion mix is the most culture-bound element of the marketing mix. Promotion in the local market has to adapt for cultural reasons (Usunier 2000). Cultural relevance in promotion ensures that messages are sent to target customers effectively (Mummert, H., 2007). In Shanghai, IKEA always sells umbrellas 50% cheaper on rainy days than sunny days, which is not only useful to attract customers to come on a bad weather day but also helpful to build a positive image in the long term. Selling umbrellas cheaper when they are needed the most shows IKEAs awareness of Chinese cultural values in terms of business philosophy (Fan, Y. , 2000) not guided by profits and attaching importance to long-lasting relationship not gains. The latter is explained more clearly in IKEA Shanghais attempts of building good public relationships. There exist other concerns apart from culture, such as the local marketing environment, the companys long-term strategic plan, etc. The message is: be culture conscientious, performing locally as well as be customer value oriented, holding a global view. In todays increasingly interdependent world, barriers to trade and international exchanges are constantly diminishing. However, the dimension of culture remains the single

most enduring feature that is necessary to be integrated in marketing strategies and in their implementation, especially when they focus on international markets (Usunier 2000).

Companies, which ignore ethical issues and social responsibilities, may not be well received in international business. IKEA has realized that and taken actions. The company joined forces with The United Nations Childrens Fund (UNICEF) to implement the UNICEF-IKEA Project to combat child labour and was praised as an example of how the private sector can do business in developing countries in a socially responsible manner. As one can see in the development of IKEAs global marketing concepts, marketing strategies must suit the marketing environment and most importantly always centre on customers. Hence, customer-centered marketing strategy has been chosen as the companys overall strategic plan, IKEA designs a marketing mix made up of factors under its controlproduct, price, place and promotion (the 4Ps)